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j2 Global Communications, Inc.$71.59$.65.92%

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 j2 Global Reports Q4 and Year End 2014 Results and Provides 2015 Outlook
   Thursday, February 12, 2015 4:30:49 PM ET

--Estimates mid-range 2015 Revenues to Increase 17% to between $690M and $710M

--Estimates 2015 Adjusted Non-GAAP EPS between $3.73 and $3.97

--Quarterly Dividend Increased by 11% to $0.2925 per Share versus Q1 2014

--Jon Miller Appointed to j2 Global(R) Board

j2 Global, Inc. (NASDAQGS:JCOM) today reported financial results for the fourth quarter and year ended December 31, 2014, provided fiscal 2015 financial estimates and announced that its Board of Directors has declared an increased quarterly cash dividend of $0.2925 per share.

FOURTH QUARTER 2014 RESULTS

Quarterly revenues increased 21.1% to a record $167.1 million compared to $138.0 million for Q4 2013.

Quarterly EBITDA(3) increased 17.2% to a record $76.9 million compared to $65.6 million for Q4 2013.



GAAP earnings per diluted share for the quarter increased 50% to a fourth quarter record of $0.66 compared to $0.44 for Q4 2013. Adjusted Non-GAAP earnings per diluted share(1)(2) increased 7.7% to $0.98 compared to $0.91 for Q4 2013. In Q2 2014, j2 issued $402.5 million in convertible senior notes, which adversely affected Q4 2014 earnings per diluted share by approximately $0.07 and Adjusted Non-GAAP earnings per diluted share by approximately $0.05.

Q4 2014 free cash flow(4) decreased (21.2)% to $39.8 million compared to $50.5 million for Q4 2013 primarily due to the increased billings from the Media business.

j2 ended the quarter with $590 million in cash and investments after deploying $143 million during the quarter for the count of eight acquisitions and the payment of j2’s regular quarterly dividend.

Key financial results for fourth quarter 2014 versus fourth quarter 2013 are set forth in the following table (in millions, except per share). Reconciliations of Adjusted earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

                                                        
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                              Q4 2014                    Q4 2013                   % Change
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenues                                                                   
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Cloud Services                                            $113.0 million              $94.6 million                  19.5%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Digital Media                                              $52.9 million              $41.8 million                  26.6%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   IP Licensing                                               $1.2 million               $1.6 million                    NM
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total:                                                       $167.1 million             $138.0 million                  21.1%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings per Diluted Share(1)                                     $0.66                      $0.44                       50%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Earnings per Diluted Share(1) (2)               $0.98                      $0.91                      7.7%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
EBITDA(3)                                                     $76.9 million              $65.6 million                  17.2%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free Cash Flow(4)                                             $39.8 million              $50.5 million                 (21.2)%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                               

FULL YEAR 2014 RESULTS

Annual revenues increased 15.0% to a record $599 million compared to $520.8 million for 2013.

Annual EBITDA (3) increased 19.1% to a record $262.6 million compared to $220.4 million for 2013.

GAAP earnings per diluted share for the year increased 13.2% to $2.58 compared to $2.28 for 2013. 2014 Adjusted Non-GAAP earnings per diluted share(5)(6) increased 11.4% to a record $3.42 compared to $3.07 for 2013. In Q2 2014, j2 issued $402.5 million in convertible senior notes, which adversely affected 2014 earnings per diluted share by approximately $0.15 and Adjusted Non-GAAP earnings per diluted share by approximately $0.10.

Free cash flow(4) for the year increased 14% to a record $171.5 million compared to $150.4 million for 2013.

Key annual financial results for 2014 versus 2013 are set forth in the following table (in millions, except per share). Reconciliations of Adjusted earnings per diluted share, EBITDA and free cash flow to their nearest comparable GAAP financial measures are attached to this Press Release.

                                                        
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                               2014                       2013                     % Change
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenues                                                                   
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Cloud Services                                            $425.9 million             $371.7 million                  14.6%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Digital Media                                             $167.6 million             $130.7 million                  28.2%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                              $5.5 million               $18.4 million                  (70)%
   IP Licensing(7)
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total:                                                        $599 million              $520.8 million                  15.0%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings per Diluted Share(5)                                     $2.58                      $2.28                      13.2%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Non-GAAP Earnings per Diluted Share(5) (6)               $3.42                      $3.07                      11.4%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
EBITDA(3)                                                    $262.6 million             $220.4 million                  19.1%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free Cash Flow(4)                                            $171.5 million             $150.4 million                  14.0%
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                               

"2014 was an excellent year for j2 during which we experienced strong growth in all operating lines of business," said Hemi Zucker, CEO of j2. "Our Cloud Services Segment saw its most significant growth in the Email and Backup businesses, growing both organically and through M&A. We also broadened our Cloud revenue base by expanding into Web Hosting with the acquisition of Web24. The Media Segment scaled exceptionally well in 2014 realizing the operating leverage we expected with more than 60% of incremental revenue flowing through to EBITDA. The Company is well-positioned for continued growth across all our brands in 2015 and beyond. We are forecasting 17% top line growth at the mid-range of our 2015 revenue estimate despite significant foreign exchange headwinds caused by the strong dollar."

BUSINESS OUTLOOK

For fiscal 2015, the Company estimates that it will achieve revenues between $690 and $710 million and Adjusted Non-GAAP earnings per diluted share of between $3.73 and $3.97.

Adjusted Non-GAAP earnings per diluted share for 2015 excludes share-based compensation of between $9 and $11 million, amortization of acquired intangibles and the impact of any currently unanticipated items, in each case net of tax.

It is anticipated that the normalized tax rate for 2015 (exclusive of the release of reserves for uncertain tax positions) will be between 27% and 29%.

DIVIDEND

j2’s Board of Directors has approved a quarterly cash dividend of $0.2925 per common share, a 2.6% increase versus last quarter’s dividend and a 11.4% increase versus the dividend paid in Q1 2014. This is j2’s 14th consecutive quarterly dividend since its first quarterly dividend in September, 2011. The dividend will be paid on March 9, 2015 to all shareholders of record as of the close of business on February 23, 2015. Future dividends will be subject to Board approval.

EXTENSION OF SHARE REPURCHASE PROGRAM

The Company has extended its one-year five million share repurchase program set to expire February 20, 2015 by an additional year. Approximately 2.9 million shares remain available for purchase under the program.

APPOINTMENT OF JON MILLER TO j2 BOARD

Jon Miller, an experienced senior executive and investor in both media and technology arenas, was appointed to j2’s board of directors. Currently, a Partner in venture capital firm Advancit Capital, Mr. Miller was previously CEO of NewsCorp Digital Media, Chairman and CEO of AOL, Inc., and CEO and President of Information and Services for USA Interactive (now IAC Corp). Mr. Miller also has held executive posts at Viacom/MTV Networks and the NBA. "It is a great pleasure to welcome such an experienced and accomplished media executive to our board at a time when we are rapidly expanding our digital media business," said Richard Ressler, Chairman of the board of j2.

Notes:

     
(1)                      The estimated GAAP effective tax rate was approximately 23.4% for Q4
                         2014 and 33.7% for Q4 2013. The estimated Adjusted Non-GAAP
                         effective tax rate was approximately 26.4% for Q4 2014 and 25.9% for
                         Q4 2013.
                          
(2)                      For Q4 2014, Adjusted Non-GAAP earnings per diluted share excludes
                         share-based compensation, amortization of acquired intangibles,
                         certain acquisition-related integration costs and certain tax
                         consulting fees, in each case net of tax, totaling $0.33. For Q4
                         2013, Adjusted Non-GAAP earnings per diluted share excludes
                         share-based compensation and related payroll taxes, amortization
                         of acquired intangibles, certain acquisition-related integration
                         costs and loss on extinguishment of debt and related interest
                         expense, in each case net of tax, totaling $0.47. Adjusted
                         Non-GAAP earnings per diluted share amounts are not meant as a
                         substitute for GAAP, but are solely for informational purposes.
                          
(3)                      EBITDA is defined as earnings before interest and other expense,
                         net; income tax expense; depreciation and amortization; and the
                         items used to reconcile EPS to Adjusted Non-GAAP EPS referred to
                         in Note (2) above. EBITDA amounts are not meant as a substitute
                         for GAAP, but are solely for informational purposes.
                          
(4)                      Free cash flow is defined as net cash provided by operating
                         activities, less purchases of property, plant and equipment, plus
                         excess tax benefit from share-based compensation. Free cash flow
                         for 2013 excludes $27 million received under a Q2 2013 License
                         Agreement. Free cash flow amounts are not meant as a substitute
                         for GAAP, but are solely for informational purposes.
                          
(5)                      The GAAP effective tax rate was approximately 19.2% for 2014 and
                         24.7% for 2013. The Adjusted Non-GAAP effective tax rate was
                         approximately 26.1% for 2014 and 24.8% for 2013.
                          
(6)                      For 2014, Adjusted Non-GAAP earnings per diluted share excludes
                         share-based compensation, amortization of acquired intangibles,
                         certain acquisition-related integration costs, certain tax
                         consulting fees and additional tax expense (benefit) from prior
                         years, and adds back the impact of the fair value adjustment to
                         deferred revenues purchased in the Livedrive acquisition, in each
                         case net of tax, totaling $0.86. For 2013, Adjusted Non-GAAP
                         earnings per diluted share excludes share-based compensation and
                         related payroll taxes, amortization of acquired intangibles,
                         certain acquisition-related integration costs, loss on
                         extinguishment of debt and related interest expense and earnings
                         attributable to a Q2 2013 License Agreement, in each case net of
                         tax, totaling $0.82. Adjusted Non-GAAP earnings per diluted share
                         amounts are not meant as a substitute for GAAP, but are solely for
                         informational purposes.
                          
(7)                      Intellectual Property (IP) Licensing revenues for fiscal year 2013
                         included a $27 million license agreement that increased revenues
                         by $12.6 million from past damages (the "Q2 2013 License
                         Agreement"). For more information on the Q2 2013 License Agreement
                         please refer to j2’s Current Report on Form 8-K filed with the
                         Securities and Exchange Commission on April 25, 2013.
                          

About j2 Global

j2 Global, Inc. (JCOM ) and its affiliates provide Internet services through their two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax(R), eVoice(R), FuseMail(R), Campaigner(R), KeepItSafe(R) and Onebox(R) and operates a messaging network spanning 50 countries on six continents. The Digital Media Division consists of Ziff Davis, LLC, which offers technology, gaming and lifestyle content through its digital properties, which include PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. Ziff Davis also operates NetShelter Powered by BuyerBase, an advanced digital ad targeting platform, and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2014, j2 had achieved 19 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this Press Release are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995, particularly those contained in Hemi Zucker’s quote and the "Business Outlook" portion regarding the Company’s expected fiscal 2015 financial performance. These forward-looking statements are based on management’s current expectations or beliefs and are subject to numerous assumptions, risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors and uncertainties include, among other items: ability to grow non-fax revenues, profitability and cash flows; ability to identify and close acquisitions; subscriber growth and retention; variability of revenue based on changing conditions in particular industries and the economy generally; protection of the Company’s proprietary technology or infringement by the Company of intellectual property of others; the risk of adverse changes in the U.S. or international regulatory environments surrounding messaging and communications, including but not limited to the imposition or increase of taxes or regulatory-related fees; and the numerous other factors set forth in j2 Global’s filings with the Securities and Exchange Commission ("SEC"). For a more detailed description of the risk factors and uncertainties affecting j2 Global, refer to the 2013 Annual Report on Form 10-K filed by j2 Global on March 3, 2014, and the other reports filed by j2 Global from time-to-time with the SEC, each of which is available at www.sec.gov. The forward-looking statements provided in this press release and particularly those contained in Hemi Zucker’s quote and the "Business Outlook" portion regarding the Company’s expected fiscal 2015 financial performance are based on limited information available to the Company at this time, which is subject to change. Although management’s expectations may change after the date of this press release, the Company undertakes no obligation to revise or update these statements.

 
                                                                                                                                      j2 GLOBAL, INC.
                                                                                                                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                 (UNAUDITED, IN THOUSANDS)
 
 
                                                                                            DECEMBER 31,                                         DECEMBER 31,
                                                                                                                                                         2014                                                                                                          2013
                                                                                                                               ---------------------------------------------------------                                                               ------------------------------------
                                                                                                                                                                                                                                                        
ASSETS
   Cash and cash equivalents                                                                                                                      $        433,663                                                                                                        $        207,801
   Short-term investments                                                                                                                                   96,206                                                                                                                  90,789
                                                                                                                                                            91,699                                                                                                                  67,245
   Accounts receivable, net of allowances of $3,685 and $4,105,
   respectively
   Prepaid expenses and other current assets                                                                                                                22,602                                                                                                                  20,064
   Deferred income taxes                                                                                                                  2,402                                                                             3,126
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
   Total current assets                                                                                                                                    646,572                                                                                                                 389,025
                                                                                                                                                                                                                                                        
   Long-term investments                                                                                                                                    60,508                                                                                                                  47,351
   Property and equipment, net                                                                                                                              38,217                                                                                                                  31,200
   Goodwill                                                                                                                                                635,675                                                                                                                 457,422
   Other purchased intangibles, net                                                                                                                        311,800                                                                                                                 223,533
   Deferred income taxes                                                                                                                                         -                                                                                                                   1,845
   Other assets                                                                                                                          12,819                                                                             3,413
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
                                                                                                                                                                                                                                                        
   TOTAL ASSETS                                                                                                                                   $      1,705,591                                                                                     $      1,153,789
                                                                                                                               ==================== ============== ====================                                                                ==================== ==============
                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
   Accounts payable and accrued expenses                                                                                                          $         95,310                                                                                                        $         69,570
   Income taxes payable                                                                                                                                          -                                                                                                                   1,569
   Deferred revenue                                                                                                                                         63,457                                                                                                                  36,326
   Liability for uncertain tax positions                                                                                                                         -                                                                                                                   5,535
   Deferred income taxes                                                                                                                                       342                                                                                                                   1,892
   Other current liabilities                                                                                                                258                                                                                 -
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
   Total current liabilities                                                                                                                               159,367                                                                                                                 114,892
                                                                                                                                                                                                                                                        
   Long-term debt                                                                                                                                          593,350                                                                                                                 245,670
   Liability for uncertain tax positions                                                                                                                    37,551                                                                                                                  38,329
   Deferred income taxes                                                                                                                                    57,957                                                                                                                  35,833
   Deferred revenue                                                                                                                                         10,182                                                                                                                  11,189
   Other long-term liabilities                                                                                                                              22,557                                                                                                                   1,458
   Mandatorily redeemable financial instrument                                                                                   --                                                                    --
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
   Total liabilities                                                                                                                                       880,964                                                                                                                 447,371
                                                                                                                                                                                                                                                        
   Commitments and contingencies                                                                                                                    --                                                                                                          --
                                                                                                                                                                                                                                                        
   Stockholders’ Equity:
   Preferred stock                                                                                                                                  --                                                                                                          --
   Common stock                                                                                                                                                474                                                                                                                     461
   Additional paid-in capital                                                                                                                              273,304                                                                                                                 216,872
   Retained earnings                                                                                                                                       553,584                                                                                                                 484,850
   Accumulated other comprehensive income (loss)                                                                                         (2,735 )                                                                                              4,235
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
      Total j2 Global, Inc. stockholder’s equity                                                                                                           824,627                                                                                                                 706,418
   Noncontrolling interest                                                                                                       --                                                                    --
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
   Total stockholders’ equity                                                                                                           824,627                                                                           706,418
                                                                                                                               -------------------- -------------- --------------------                                                                -------------------- --------------
                                                                                                                                                                                                                                                        
   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                     $      1,705,591                                                                                     $      1,153,789
                                                                                                                               ==================== ============== ====================                                                                ==================== ==============
                                                                                                                                                                                                                                                        
 
                                                                                                                                                                                                                                     j2 GLOBAL, INC.
                                                                                                                                                                                                                                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                                                                                                                                                                                        (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
 
                                                                                                                                              THREE MONTHS ENDED                                                                                                                                        TWELVE MONTHS ENDED
                                                                                                                                                                                                          DECEMBER 31,                                                                                                                                                                                                       DECEMBER 31,
                                                                                                                                      ----------------------------------------------------------------------------------------------------------------------------------------------------                                                               ----------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                              2014                                             2013                                                                                                     2014                                             2013
                                                                                                                                      -----------------------------------------------------                                                               --------------------------------                                                               -----------------------------------------------------                                                               --------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Revenues                                                                                                                                                 $    167,145                                                                                                        $    138,035                                                                                   $    599,030                                                                                                        $    520,801
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Cost of revenues (including share-based compensation of $83 and $346                                                                        28,999                                                                        22,178                                                                     105,989                                                                        86,893
for the three and twelve months of 2014, respectively, and $175 and
$756 for the three and twelve months of 2013, respectively)
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
   Gross profit                                                                                                                            138,146                                                                       115,857                                                                     493,041                                                                       433,908
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating expenses:
   Sales and marketing (including share-based compensation of $584 and                                                                                         36,633                                                                                                              31,679                                                                                        141,967                                                                                                             131,317
   $1,944 for the three and twelve months of 2014, respectively, and
   $540 and $1,855 for the three and twelve months of 2013,
   respectively)
   Research, development and engineering (including share-based                                                                                                 8,228                                                                                                               6,351                                                                                         30,680                                                                                                              25,485
   compensation of $184 and $721 for the three and twelve months of
   2014, respectively, and $123 and $434 for the three and twelve
   months of 2013, respectively)
   General and administrative (including share-based compensation of                                                                        39,979                                                                        27,306                                                                     134,188                                                                       101,683
   $1,520 and $5,898 for the three and twelve months of 2014,
   respectively, and $1,774 and $6,675 for the three and twelve months
   of 2013, respectively)
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
Total operating expenses                                                                                                                    84,840                                                                        65,336                                                                     306,835                                                                       258,485
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Income from operations                                                                                                                                         53,306                                                                                                              50,521                                                                                        186,206                                                                                                             175,423
Other expense (income), net                                                                                                                                        89                                                                                                              12,071                                                                                           (165 )                                                                                                            11,472
Interest expense (income), net                                                                                                              10,451                                                                         6,546                                                                      31,204                                                                        21,254
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
Income before income taxes                                                                                                                                     42,766                                                                                                              31,904                                                                                        155,167                                                                                                             142,697
Income tax expense                                                                                                                          10,012                                                                        10,747                                                                      29,840                                                                        35,175
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
Net income                                                                                                                                                     32,754                                                                                                              21,157                                                                                        125,327                                                                                                             107,522
Less net income attributable to noncontrolling interest                                                                                                             -                                                                                                                 403                                                                                              -                                                                                                                   -
Less extinguishment of Series A Preferred Stock                                                                                               (991 )                                                                                              -                                                                        (991 )                                                                                              -
                                                                                                                                      -------------------- ---------- --------------------                                                                -------------------- ----------                                                                -------------------- ---------- --------------------                                                                -------------------- ----------
Net income attributable to j2 Global, Inc. common stockholders                                                                                           $     31,763                                                                                     $     20,754                                                                                   $    124,336                                                                                     $    107,522
                                                                                                                                      ==================== ========== ====================                                                                ==================== ==========                                                                ==================== ========== ====================                                                                ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Basic net income per common share:
   Net income attributable to j2 Global, Inc. common stockholders                                                                                        $       0.66                                                                                     $       0.45                                                                                   $       2.60                                                                                     $       2.31
                                                                                                                                      ==================== ========== ====================                                                                ==================== ==========                                                                ==================== ========== ====================                                                                ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Diluted net income per common share:
   Net income attributable to j2 Global, Inc. common stockholders                                                                                        $       0.66                                                                                     $       0.44                                                                                   $       2.58                                                                                     $       2.28
                                                                                                                                      ==================== ========== ====================                                                                ==================== ==========                                                                ==================== ========== ====================                                                                ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Basic weighted average shares outstanding                                                                                               47,146,503                                                                    45,867,769                                                                  46,778,015                                                                    45,548,767
                                                                                                                                      ==================== ========== ====================                                                                ==================== ==========                                                                ==================== ========== ====================                                                                ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Diluted weighted average shares outstanding                                                                                             47,468,841                                                                    46,382,363                                                                  47,106,538                                                                    46,140,019
                                                                                                                                      ==================== ========== ====================                                                                ==================== ==========                                                                ==================== ========== ====================                                                                ==================== ==========
 
 
                                                                                                                                                     j2 GLOBAL, INC.
                                                                                                                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                                (UNAUDITED, IN THOUSANDS)
 
 
                                                                                                                                                      TWELVE MONTHS ENDED DECEMBER 31,
                                                                                                                                                                 2014                                                           2013
                                                                                                                                       ---------------------------------------------------------                                                               ---------------------------------------------------------
                                                                                                                                                                                                                                                                
Cash flows from operating activities:
      Net income                                                                                                                                          $        125,327                                                                                                        $        107,522
   Adjustments to reconcile net income to net cash provided by
   operating activities:
      Depreciation and amortization                                                                                                                                 62,953                                                                                                                  39,788
      Accretion and amortization of discount and premium of investments                                                                                              1,334                                                                                                                   1,796
      Amortization of financing costs and discounts                                                                                                                  5,045                                                                                                                     613
      Share-based compensation                                                                                                                                       8,908                                                                                                                   9,720
      Excess tax benefit from share-based compensation                                                                                                              (6,839 )                                                                                                                (2,695 )
      Provision for doubtful accounts                                                                                                                                4,702                                                                                                                   3,135
      Deferred income taxes                                                                                                                                        (10,033 )                                                                                                                 1,202
      Loss on extinguishment of debt and related interest expense                                                                                                        0                                                                                                                  14,437
      Loss on sale of available-for-sale investment                                                                                                                    (90 )                                                                                                        --
   Decrease (increase) in:
      Accounts receivable                                                                                                                                          (11,078 )                                                                                                                (9,588 )
      Prepaid expenses and other current assets                                                                                                                     (3,212 )                                                                                                                   149
      Other assets                                                                                                                                                     (42 )                                                                                                                   242
   (Decrease) increase in:
      Accounts payable and accrued expenses                                                                                                                         (5,447 )                                                                                                                 9,126
      Income taxes payable                                                                                                                                          10,797                                                                                                                    (285 )
      Deferred revenue                                                                                                                                                (711 )                                                                                                                12,368
      Liability for uncertain tax positions                                                                                                                         (6,313 )                                                                                                                 6,186
      Other liabilities                                                                                                                             603                                                                              (392 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
Net cash provided by operating activities                                                                                                       175,904                                                                           193,324  
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                
Cash flows from investing activities:
      Maturity of certificate of deposit                                                                                                                            14,520                                                                                                                  42,615
      Purchase of certificates of deposit                                                                                                                              (65 )                                                                                                               (22,071 )
      Sales of available-for-sale investments                                                                                                                      110,363                                                                                                                 140,126
      Purchases of available-for-sale investments                                                                                                                 (138,452 )                                                                                                              (168,901 )
      Purchases of property and equipment                                                                                                                          (11,221 )                                                                                                               (18,626 )
      Purchases of intangible assets                                                                                                                                (5,336 )                                                                                                               (14,200 )
      Acquisition of businesses, net of cash received                                                                                          (245,278 )                                                                                           (126,341 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
Net cash used in investing activities                                                                                                          (275,469 )                                                                                           (167,398 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                
Cash flows from financing activities:
      Issuance of long-term debt                                                                                                                                   402,500                                                                                                          --
      Debt issuance costs                                                                                                                                          (12,924 )                                                                                                                   (47 )
      Repurchases of stock                                                                                                                                          (5,663 )                                                                                                                (4,587 )
      Issuance of stock, net of costs                                                                                                                                6,886                                                                                                                  13,865
      Excess tax benefit from share-based compensation                                                                                                               6,839                                                                                                                   2,695
      Mandatorily redeemable financial instrument                                                                                                           --                                                                                                          --
      Dividends paid                                                                                                                                               (52,269 )                                                                                                               (45,134 )
      Other                                                                                                                                     (16,512 )                                                                                             (2,485 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
Net cash (used in) provided by financing activities                                                                                             328,857                                                                           (35,693 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                
Effect of exchange rate changes on cash and cash equivalents                                                                                     (3,430 )                                                                                             (1,112 )
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                
Net (decrease) increase in cash and cash equivalents                                                                                                               225,862                                                                                                                 (10,879 )
Cash and cash equivalents at beginning of period                                                                                                207,801                                                                           218,680  
                                                                                                                                       -------------------- -------------- --------------------                                                                -------------------- -------------- --------------------
Cash and cash equivalents at end of period                                                                                                                $        433,663                                                                                     $        207,801  
                                                                                                                                       ==================== ============== ====================                                                                ==================== ============== ====================
 
 
                        j2 GLOBAL, INC.
     RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
         THREE MONTHS ENDED DECEMBER 31, 2014 AND 2013
 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 

Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) IRS consulting fee; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of loss on extinguishment of debt and related interest expense associated with acquiring shares of Ziff Davis, Inc. that the company did not already own and (6) elimination of income tax provision associated with the noted modifications.

 
                                                                                                                                                                    THREE MONTHS ENDED DECEMBER 31, 2014                                                                                                                                                                                                                   THREE MONTHS ENDED DECEMBER 31, 2013
                                                                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Loss on
                                                                                                                                                                              (2)                                                                                                                                                                                                                                                                                                             (2)                                                                                   Extinguishment
                                                                                                                                                                         Acquisition-                                      (3)                                                                                                                                                                                                                                                           Acquisition-                                                                                 of Debt and
                                                                                                                                (1)                                         related                                        IRS                                                                                                                                                                                                                  (1)                                         related                                                                                     Related
                                                                                                                            Share-based                                   Integration                                  Consulting                                       (4)                                      Adjusted                                                                                                                   Share-based                                   Integration                                       (4)                                        Interest                                      Adjusted
                                                                                        GAAP                               Compensation                                      Costs                                         Fee                                     Amortization                                  Non-GAAP                                                                            GAAP                                  Compensation                                      Costs                                     Amortization                                     Expense                                      Non-GAAP
                                                                                    ------------                     -------------------------                     -------------------------                     -----------------------                     -------------------------                     --------------------                                                               ------------------                     -------------------------                     -------------------------                     -------------------------                     -------------------------                     ------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Revenues                                                                            $ 167,145                             --                                           336                               --                               --                              $        167,481                                                                 $        138,035                           --                                            (8 )                              --                                --                                $        138,027
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Cost of revenues                                                                       28,999                                        (82 )                              --                               --                                         (668 )                                      28,249                                                                           22,178                                     (175 )                              --                                --                                --                                          22,003
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating expenses:
   Sales and marketing                                                                 36,633                                       (584 )                                         (25 )                             --                               --                                        36,024                                                                           31,679                                     (540 )                                        (189 )                              --                                --                                          30,950
   Research, development and engineering                                                8,228                                       (184 )                                          (2 )                             --                               --                                         8,042                                                                            6,351                                     (123 )                                         (13 )                              --                                --                                           6,215
   General and administrative                                                          39,979                                     (1,520 )                                        (589 )                                       (650 )                                    (15,134 )                                      22,086                                                                           27,306                                   (1,691 )                                      (1,012 )                                      (8,583 )                              --                                          16,020
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Other expense (income), net                                                                89                             --                                --                               --                               --                                            89                                                                           12,071                           --                                --                                --                                       (12,865 )                                          (794 )
Interest expense (income), net                                                         10,451                             --                                        (2,124 )                             --                               --                                         8,327                                                                            6,546                           --                                --                                --                                        (1,572 )                                         4,974
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Income tax provision (6)                                                               10,012                                        789                                         1,123                                          176                                        4,959                                        17,059                                                                           10,747                                      879                                           520                                         3,047                                --                                          15,193
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Net Income                                                                          $  32,754                                      1,581                                         1,953                                          474                                       10,843                              $         47,605                                                                 $         21,157                                    1,650                                           686                                         5,536                                        14,437                                $         43,466
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Extinguishment of Series A Preferred Stock                                               (991 )                           --                                           991                               --                               --                                --                                                                   --                           --                                --                                --                                --                                  --
 
Net income attributable to j2 Global, Inc. common stockholders                      $  31,763                           $          1,581                              $          2,944                             $            474                             $         10,843                              $         47,605                                                                 $         20,754                         $          1,650                              $            686                              $          5,536                              $         14,437                                $         43,063
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Net income per share attributable to j2 Global, Inc. common
stockholders*:
   Basic                                                                            $    0.66                                       0.03                                          0.06                                         0.01                                         0.23                              $           0.99                                                                 $           0.45                                     0.04                                          0.02                                          0.12                                          0.31                                $           0.92
   Diluted                                                                          $    0.66                                       0.03                                          0.06                                         0.01                                         0.23                              $           0.98                                                                 $           0.44                                     0.04                                          0.02                                          0.12                                          0.31                                $           0.91
 

* The reconciliation of Net income per share from GAAP to non-GAAP may not foot since each is calculated independently.

The Company discloses non-GAAP Earnings Per Share (EPS) as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company’s performance. Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

Non-GAAP EPS is not in accordance with, or an alternative to, Net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

 
                        j2 GLOBAL, INC.
     RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
        TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013
 (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 

Non-GAAP net income is GAAP net income with the following modifications: (1) elimination of share-based compensation and the associated payroll tax expense; (2) elimination of certain acquisition-related integration costs and the impact of fair value adjustments to deferred revenue purchased in the Livedrive acquisition; (3) IRS consulting fee; (4) elimination of amortization of patents and intangible assets that we acquired; (5) elimination of additional income tax benefit from prior years; (6) elimination of loss on extinguishment of debt and related interest expense associated with acquiring shares of Ziff Davis, Inc. that the company did not already own; (7) elimination of revenue associated with past damages under a single $27 million license agreement; and (8) elimination of income tax provision associated with the noted modifications.

 
                                                                                                                                                                                           TWELVE MONTHS ENDED DECEMBER 31, 2014                                                                                                                                                                                                                                                              TWELVE MONTHS ENDED DECEMBER 31, 2013
                                                                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                     (5)                                                                                                                                                                                                                                                                                                               (6)
                                                                                                                                                                                                                                                                                                                 Additional                                                                                                                                                                                                                                                                                                          Loss on
                                                                                                                                                                              (2)                                                                                                                                    Tax                                                                                                                                                                                                                   (2)                                                                                   Extinguishment
                                                                                                                                                                         Acquisition-                                      (3)                                                                                     Expense                                                                                                                                                                                                            Acquisition-                                                                                 of Debt and
                                                                                                                                (1)                                         related                                        IRS                                                                                    (Benefit)                                                                                                                                                                  (1)                                         related                                                                                     Related                                        (7)
                                                                                                                            Share-based                                   Integration                                  Consulting                                       (4)                                         from                                     Adjusted                                                                                                                    Share-based                                   Integration                                       (4)                                        Interest                                      Patent                                      Adjusted
                                                                                        GAAP                               Compensation                                      Costs                                         Fee                                     Amortization                                  Prior Years                                 Non-GAAP                                                                             GAAP                                  Compensation                                      Costs                                     Amortization                                     Expense                                    Settlement                                    Non-GAAP
                                                                                    ------------                     -------------------------                     -------------------------                     -----------------------                     -------------------------                     -----------------------                     ---------------------                                                               ------------------                     -------------------------                     -------------------------                     -------------------------                     -------------------------                     -----------------------                     ------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Revenues                                                                            $ 599,030                             --                                         2,075                               --                               --                               --                           $        601,105                                                                    $        520,801                           --                                        (2,214 )                              --                                --                                      (12,572 )                             $        506,015
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Cost of revenues                                                                      105,989                                       (345 )                                         (57 )                             --                                       (2,462 )                             --                                    103,125                                                                              86,893                                     (756 )                                         (88 )                              --                                --                               --                                         86,049
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Operating expenses:
   Sales and marketing                                                                141,967                                     (1,944 )                                        (125 )                             --                               --                               --                                    139,898                                                                             131,317                                   (1,855 )                                      (4,621 )                              --                                --                               --                                        124,841
   Research, development and engineering                                               30,680                                       (721 )                                         (34 )                             --                               --                               --                                     29,925                                                                              25,485                                     (434 )                                        (592 )                              --                                --                               --                                         24,459
   General and administrative                                                         134,188                                     (5,898 )                                        (144 )                                     (1,423 )                                    (47,247 )                                       (713 )                                   78,763                                                                             101,683                                   (6,592 )                                      (5,134 )                                     (30,022 )                              --                               --                                         59,935
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Other expense (income), net                                                              (165 )                           --                                --                               --                               --                               --                                       (165 )                                                                            11,472                           --                                --                                --                                       (12,865 )                             --                                         (1,393 )
Interest expense (income), net                                                         31,204                             --                                        (4,082 )                             --                               --                               --                                     27,122                                                                              21,254                           --                                --                                --                                        (1,572 )                             --                                         19,682
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Income tax provision (8)                                                               29,840                                      3,115                                         2,148                                          369                                       16,092                                        6,435                                     57,999                                                                              35,175                                    3,263                                         3,529                                        10,435                                --                                       (4,614 )                                       47,788
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Net Income                                                                          $ 125,327                                      5,793                                         4,369                                        1,054                                       33,617                                       (5,722 )                         $        164,438                                                                    $        107,522                                    6,374                                         4,692                                        19,587                                        14,437                                       (7,958 )                             $        144,654
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Extinguishment of Series A Preferred Stock                                               (991 )                           --                                           991                               --                               --                               --                             --                                                                      --                           --                                --                                --                                --                               --                                 --
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Net income attributable to j2 Global, Inc. common stockholders                      $ 124,336                           $          5,793                              $          5,360                             $          1,054                             $         33,617                             $         (5,722 )                         $        164,438                                                                    $        107,522                         $          6,374                              $          4,692                              $         19,587                              $         14,437                             $         (7,958 )                             $        144,654
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Net income per share attributable to j2 Global, Inc. common
stockholders*:
   Basic                                                                            $    2.60                                       0.13                                          0.12                                         0.02                                         0.72                                        (0.12 )                         $           3.44                                                                    $           2.31                                     0.15                                          0.11                                          0.43                                          0.32                                        (0.17 )                             $           3.18
   Diluted                                                                          $    2.58                                       0.13                                          0.12                                         0.02                                         0.71                                        (0.12 )                         $           3.42                                                                    $           2.28                                     0.14                                          0.11                                          0.42                                          0.31                                        (0.17 )                             $           3.07
 

* The reconciliation of Net income per share from GAAP to non-GAAP may not foot since each is calculated independently.

The Company discloses non-GAAP Earnings Per Share (EPS) as supplemental non-GAAP financial performance measure, as it believes it is a useful metric by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company’s performance. Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

Non-GAAP EPS is not in accordance with, or an alternative to, Net income per share and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

 
                                                                                                                                                                                                                                     j2 GLOBAL, INC.
                                                                                                                                                                                                                              NET INCOME TO EBITDA RECONCILIATION
                                                                                                                                                                                                                   THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013
                                                                                                                                                                                                                                   (UNAUDITED, IN THOUSANDS)
 
The following table sets forth a reconciliation of EBITDA to net
income, the most directly comparable GAAP financial measure.
 
                                                                                                                              THREE MONTHS ENDED                                                                                                                                 TWELVE MONTHS ENDED
                                                                                                                                                                                          DECEMBER 31,                                                                                                                                                                                                DECEMBER 31,
                                                                                                                                                 2014                              2013                                                                                                  2014                                                    2013
                                                                                                                                     ----------------------------                                                               ----------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Net income                                                                                                                                              $ 32,754                                                                                   $ 21,157                                                                                   $ 125,327                                                                                                        $ 107,522
Plus:
   Other expense (income), net                                                                                                                                89                                                                                     12,071                                                                                        (165 )                                                                                                         11,472
   Interest expense (income), net                                                                                                                         10,451                                                                                      6,546                                                                                      31,204                                                                                                           21,254
   Income tax expense                                                                                                                                     10,012                                                                                     10,747                                                                                      29,840                                                                                                           35,175
   Depreciation and amortization                                                                                                                          19,646                                                                                     11,311                                                                                      62,953                                                                                                           39,737
   Reconciliation of GAAP to Non-GAAP financial measures:
      Patent Settlement                                                                                                                                        -                                                                                          -                                                                                           -                                                                                                          (12,572 )
      Share-based compensation and the associated payroll tax expense                                                                                      2,370                                                                                      2,529                                                                                       8,908                                                                                                            9,637
      Acquisition-related integration costs                                                                                                                  952                                                                                      1,206                                                                                       2,435                                                                                                            8,221
      Additional indirect tax expense from prior years                                                                                                         -                                                                                          -                                                                                         713                                                                                                                -
      Fees associated with prior year tax audits                                                                                          650                                                                       -                                                                    1,423                                                                          -  
                                                                                                                                     -------------------- ------                                                                -------------------- ------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
EBITDA                                                                                                                                                  $ 76,924                                                                                   $ 65,567                                                                                   $ 262,638                                                                                     $ 220,446  
                                                                                                                                     ==================== ======                                                                ==================== ======                                                                ==================== ======= ====================                                                                ==================== ======= ====================
 

EBITDA is defined as earnings before interest and other expense, net; income tax expense; depreciation and amortization; and the items used to reconcile EPS to Adjusted Non-GAAP EPS. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes. We disclose EBITDA as a supplemental non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.

EBITDA is not in accordance with, or an alternative to, Net income, and may be different from non-GAAP measures used by other companies. In addition, EBITDA is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the company’s results of operations determined in accordance with GAAP.

 
                                                                                                                                                                                                                                     j2 GLOBAL, INC.
                                                                                                                                                                                                                                     NON-GAAP FINANCIAL MEASURES
                                                                                                                                                                                                                                     (UNAUDITED, IN THOUSANDS)
 
 
                                                                                             Q1                                                      Q2                                                     Q3                                                     Q4                                                      YTD
                                                                                                                               ----------------------------------------------                                                                  -----------------------------------------------                                                                  ----------------------------------------------                                                                  ----------------------------------------------                                                                  -----------------------------------------------
                              2014
---------------------------------------------------------------
Net cash provided by operating activities                                                                                                         $ 37,294                                                                                                        $  54,512                                                                                                        $ 40,315                                                                                                        $ 43,783                                                                                                        $ 175,904
Less: Purchases of property and equipment                                                                                                           (2,936 )                                                                                                         (1,087 )                                                                                                        (3,124 )                                                                                                        (4,074 )                                                                                                        (11,221 )
Add: Excess tax benefit from share-based compensation                                                                             4,082               721            1,925              111             6,839  
                                                                                                                               -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Free cash flows                                                                                                                                   $ 38,440                            $  54,146                            $ 39,116                            $ 39,820                            $ 171,522  
                                                                                                                               ==================== ====== ==================== ==================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                      Q1                                                                                                               Q2                                                                                                              Q3                                                                                                              Q4                                                                                                               YTD
                                                                                                                               ----------------------------------------------                                                                  -----------------------------------------------                                                                  ----------------------------------------------                                                                  ----------------------------------------------                                                                  -----------------------------------------------
                              2013
---------------------------------------------------------------
Net cash provided by operating activities                                                                                                         $ 40,048                                                                                                        $  68,973                                                                                                        $ 25,859                                                                                                        $ 58,444                                                                                                        $ 193,324
Less: Purchases of property and equipment                                                                                                           (1,933 )                                                                                                         (4,056 )                                                                                                        (5,126 )                                                                                                        (7,511 )                                                                                                        (18,626 )
Add: Excess tax benefit (deficit) from share-based compensation                                                                                        280                                                                                                            1,301                                                                                                           1,590                                                                                                            (476 )                                                                                                          2,695
Less: Patent Settlement                                                                                                               -           (27,000 )                                 -                -           (27,000 )
                                                                                                                               -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Free cash flows                                                                                                                                   $ 38,395                            $  39,218                            $ 22,323                            $ 50,457                            $ 150,393  
                                                                                                                               ==================== ====== ==================== ==================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ==================== ======= ====================
 

The Company discloses Free Cash Flows as supplemental non-GAAP financial performance measure, as it believes it is a useful metrics by which to compare the performance of its business from period to period. The Company also understands that this non-GAAP measure is broadly used by analysts, rating agencies and investors in assessing the Company’s performance. Accordingly, the Company believes that the presentation of this non-GAAP financial measure provides useful information to investors.

Free Cash Flows is not in accordance with, or an alternative to, Cash Flows from Operating Activities, and may be different from non-GAAP measures with similar or even identical names used by other companies. In addition, the non-GAAP measure is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure has limitations in that it does not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150212006534r1&sid=cmtx6&distro=nx&lang=en

SOURCE: j2 Global, Inc.

j2 Global, Inc. 
Laura Hinson, 800-577-1790 
press@j2.com


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